Arriva Medical LLC (Arriva) and its parent company Alere Inc. (Alere) have agreed to pay $160 million to resolve whistleblower claims that they violated the False Claims Act. Arriva was the largest Medicare mail-order diabetic testing supplier until the company shut down in December of 2017. The settlement resolves claims that Arriva and Alere caused the submission of false claims to Medicare because of kickbacks paid to Medicare subscribers. It also resolves claims that the two companies charged Medicare for new glucometers when patients were ineligible for new ones, and billed Medicare for deceased patients.
The whistleblower suit alleged that between 2010 and 2016, Arriva advertised “free” or “no cost” glucometers to new and existing patients, according to the settlement agreement. As patients who qualify for Medicare only have to pay copayments for most of their covered medical costs, Arriva and Alere fulfilled their promise of free glucometers by waiving, or not collecting, the copayments required for new glucometers. Medicare beneficiaries are eligible for a new glucometer to be covered by Medicare once every five years. The lawsuit alleges that Arriva and Alere advertised these free glucometers as a way to increase their client base, and encourage patients to order more of their diabetes supplies from Arriva.
The government alleges that Arriva and Alere routinely did not follow through on collecting the copayments required for many of the charges that they billed to Medicare. The settlement agreement claims that Arriva automatically waived many copayments by sending up to three invoices for payment to patients, and then not pursuing collection of copayment any further.
In 2016, Medicare revoked Arriva’s Medicare supplier number on suspicions that the company was billing Medicare on behalf of deceased patients. This settlement resolves those allegations as well.
“Paying illegal inducements to Medicare beneficiaries in the form of free items and routine copayment waivers can result in overutilization and waste taxpayer funds,” said Acting Assistant Attorney General Brian M. Boynton for the Justice Department’s Civil Division. “We will continue to protect the integrity of the Medicare program by pursuing fraudulent claims arising from violations of the Anti-Kickback Statute or other applicable reimbursement requirements.”
The whistleblower in this case, Gregory Goodman, worked at an Arriva call center in Antioch, Tennessee before blowing the whistle. Under the qui tam provisions of the False Claims Act, whistleblowers are entitled to a reward of 15 to 30% of the total money recovered by the government. In this settlement, Goodman will receive a reward of over $28.5 million. This latest settlement proves yet again that the False Claims Act’s reward system works to incentivize disclosures from employees who witness fraud or mismanagement by large corporate entities.